Child Labor under Cash and In-Kind Transfers - Article - Effects on children’s time allocation

Jul 19, 2026

This paper examines how cash versus in-kind transfers affect children’s time allocation, using a randomized rollout that provided either cash or a basket of food to poor households in Mexico. Children in cash-recipient households show a larger reduction in paid employment and work hours and a greater increase in schooling than children receiving in-kind support. The modality gap is explained by household characteristics tied to lower women’s decision-making power, suggesting cash can strengthen female empowerment.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages25

Reading Time1 h 3 min

Introduction

Child labor and poverty dynamics

Transfer modalities and existing evidence

Study design and research focus

Randomized program rollout in Mexico

Results and mechanisms

Employment vs schooling effects across modalities

Role of women’s decision-making power

Conclusion

Pub lic Disclosure Authorized Pub lic Disclosure Authorized The World Bank Economic Review, 36(3), 2022, 709–733 [https://doi.org10.1093/wber/lhac006](https://doi.org10.1093/wber/lhac006) Article Child Labor under Cash and In-Kind Transfers Federico Tagliati Abstract This paper studies the effects of cash versus in-kind transfers on the time allocation of children exploiting the randomized rollout of a program which transferred either cash or a basket of food to poor households in Mexico. Children in cash-recipient households experience a significantly larger decrease in paid employment and hours of work, and an increase in schooling, as compared to children in in-kind-recipient households. Both transfers are given to a female member of the household to enhance women’s participation in household decision-making. The difference between the cash and in-kind impacts on child time allocation is entirely driven by households presenting characteristics associated with lower female decision-making power. Thus, differences in child employment responses across transfer modalities are likely related to women-targeted transfers having larger effects on female empowerment when provided in cash. JEL classification: D61, H23, H43, I38, 022 Keywords: cash transfers, in-kind transfers, child labor, schooling 1. Introduction More than 200 million children between 5 and 17 years of age are economically active in the world (ILO 2017) . Employment at younger ages is often regarded as one of the main causes of the perpetuation of poverty in the developing world as it typically forces children to abandon school at an early stage, thus interfering with their human capital development. Several explanations for the existence of child employment in poor countries have been proposed in the literature.1 However, there is ample consensus that children tend to work less when a household’s economic conditions improve.2 This view has motivated Federico Tagliati is an economist at the Bank of Spain, Madrid, Spain. His email address is federico.tagliati@bde.es. The author thanks Aureo de Paula and Valérie Lechene for invaluable advice and suggestions and Alex Armand, Orazio Attanasio, Ciro Avitabile, Antonio Cabrales, Valerio Dotti, Antonio Guarino, Laura Hospido, Yuliya Kulikova, Aitor Lacuesta, Carlos Sanz, Marcos Vera-Hernandez, Ernesto Villanueva, the editor Eric Edmonds, three anonymous referees, and conference participants at the IIPF Annual Conference and SAEe for helpful comments. The author is grateful to Orazio Attanasio and Giacomo De Giorgi for providing access to the data. Financial support from the EPSRC, Fondazione Luigi Einaudi, and Fondazione peril Territorio BPN is gratefully acknowledged. A supplementary online appendix is available with this article at The World Bank Economic Review website 1 Basu and Van (1998) propose a model of child employment with multiple equilibria: one in which children work because parental earnings are low and another in which children do not work because parental earnings are high. Baland and Robinson (2000) and Ranjan (2001) show that, when credit or capital markets are imperfect, parents use child employment as a substitute for their inability to borrow against their children’s future earnings. 2 Apart from the literature on poverty alleviation programs, which is reviewed in the main text, the relationship between changes in economic conditions and the time allocation of children has been studied empirically in an extensive number of settings, with mixed results. Edmonds (2005) finds that the reduction of child labor in Vietnam can be mainly © The Author(s) 2022 . Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK. All rights reserved. For permissions, please e-mail: [journals.permissions@oup.com](journals.permissions@oup.com) Downloaded from [https://academic.oup.com/wber/article/36/3/709/6589621](https:/

FAQs

What does the paper compare regarding transfer types?

It compares cash transfers with in-kind transfers (a basket of food) and how each changes children’s time allocation.

What are the observed effects on children’s work and schooling?

Cash-recipient children experience larger decreases in paid employment and work hours and larger increases in schooling compared with in-kind-recipient children.

What explains the difference between cash and in-kind impacts?

The difference is driven by households with characteristics associated with lower female decision-making power, implying cash can yield stronger empowerment effects through women-targeted transfers.

Jul 19, 2026

Upload by Emma Wilson